Today, Argentina has raised interest rates to 60 percent. The hike comes after the value of the peso fell to a record low.
The 15 percent increase comes after an urgent call from the government for the early release of a $50bn (£38.5bn) credit line from the International Monetary fund. It comes after the currency tumbled last Wednesday amid a worsening financial crisis in the country and a wider challenge for emerging market currencies.
According to the Financial Times, the news comes as Erkan Kilimci, the deputy governor of Turkey’s central bank, stepped down from his position before of a crucial decision over the interest rates in two weeks.
The resignation of Kilimci comes after a four-day long drop in the value of the lira, which currently stands at only 6.74 to the US dollar. It has since affected the world’s other emerging market currencies such as the Indian rupee and the South African rand.
The most recent decline means that the lira has lost nearly 11 percent of its value this week. The drop that was experienced today attributed to more investors selling off the currency after the end of the Eid al-Adha holiday of the Islam.
The replacement of Kilimci will be appointed by Recep Yayyip Erdogan, the president of Turkey. He has urged the bank not to raise the interest rates despite the weakening of the currency.
The monetary policy of Erdogan has been criticised for worsening the problems, and critics had claimed that he has too much influence over the central bank.
Jameel Ahmed, global head of currencies of FXTM, stated: “It is a little bit too early to speculate over whether news of one of the Central Bank Deputy Governors stepping down from his role could be linked to ongoing fears over central bank independence, but investors are wasting no time in pricing into the Lira that this news is no coincidence.”
He added: “President Erdogan has been so outspoken towards interest rate policy in Turkey that investors have become terrified towards holding onto the Lira, and this news will be digested by traders as an indication that the deputy governor who is stepping down does not fulfil the philosophy of a President known as the self-declared enemy of high interest rates.”